Request for Exemption from Payment of Income Tax and Filing of Corresponding Income Tax Return

December 18, 1986 BIR RULING NO. 277-86 027-g 277-86 Gentlemen : This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27 of the Tax Code. Documentary evidence submitted shows that the Corporation is duly registered with the Securities and Exchange Commission; that it is organized under the provisions of the Condominium Act of the Philippines (R.A. No. 4726); and that the purposes for which that Corporation is formed are to hold title to the common areas in the condominium project known and identified as "ODC International Plaza". It should be noted that as gleaned in your articles of incorporation, the services to be rendered by your condominium corporation benefit only the common areas of the condominium project as well as the members thereof who are the owners of the condominium units; and that the services to be rendered do not benefit the community as a whole. In view of the foregoing, and since the activities of the ODC International Plaza Condominium Corporation benefit only the unit owners of the corporation, it cannot be considered a civic league organization operated exclusively for the promotion of social welfare as contemplated under Section 27(g) of the Tax Code, for the promotion of social welfare covers activities that advance the common good and general welfare of the people of the community (34 Am. Jur. 2d, 1976 Ed. p. 586). Moreover, an association formed by the unit owners of a condominium project to provide for the management, maintenance and care of all areas and elements in their condominium was denied exemption as a social welfare organization (34 Am. Jur. 2d., 1976 Ed., p. 690). Consequently, that corporation should file an income tax return and pay income tax on its net income. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue